A Clean Energy Future: what’s in it for the land?

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Disclosure statement

Rod Keenan has received funding from the Australian Centre for International Agricultural Research (ACIAR) for research on community based forest and carbon management in Papua New Guinea, from the Victorian Department of Sustainability and Environment for research on biosequestration and biodiversity and from the ARC on Australia's legal preparedness for climate change (with Lee Godden and Jackie Peel at the Melbourne Law School).

The Australian government’s plan for a Clean Energy Future contains a number of measures aimed at supporting farmers and land managers to provide emissions offsets.

The plan consists of a mix of market-based and directly funded actions, covering some of the territory put forward by the Coalition, but on a much larger scale.

Farming and other land-based activities are not liable for their emissions but, as proposed in the recent Garnaut Update, the scheme will provide for the creation of credits (Australian carbon credit units or ACCUs) generated under the Carbon Farming Initiative that can be sold to businesses that want to offset their carbon emissions.

Credits created through “Kyoto-compliant” activities can be used to meet liabilities under the carbon pricing mechanism. These include:

carbon sequestration in reforestation,

reduction in methane emissions from changing savanna fire management

reductions in emissions of methane or nitrous oxide from livestock and fertiliser use and

(possibly) reduced carbon emissions from deforestation.

But in the fixed price period (until 2015) emitters will only be able to use these to meet up to five percent of their obligations. Once the price floats, they will have unlimited use to these credits. CFI units will be bankable for future use.

The plan is more generous in the use of credits than Garnaut, who had proposed a lower starting cap and maintaining limits through to 2020.

A Carbon Fund of $250 million over the first six years will be used to invest in adoption of “non-Kyoto” activities, including shrubland or rangeland revegetation and soil carbon projects. Australia will continue working to develop new international rules that recognise this wider range of land-based activities.

Safeguards will be put in place to ensure the environmental integrity of the Carbon Farming Initiative and the provision of benefits for sustainability and biodiversity.

A number of direct investments were also put forward. The largest is an ongoing Biodiversity Fund with $946 million ($157 million per year) proposed over the first six years. This fund will support projects that establish, restore, protect or manage biodiverse carbon stores and that secure environmental outcomes from carbon farming.

This could include reforestation and revegetation in areas of high conservation value such as wildlife corridors, rivers, streams and wetlands, the management of publicly owned native forests and land under conservation covenants or subject to land clearing restrictions. The fund can also potentially be used to prevent the spread of invasive species across connected landscapes.

The plan also proposes investment in a Carbon Farming Futures program ($429 million over the first six years) to support research and development, improved measurement approaches and action on the ground to reduce emissions or store carbon, including support for conservation tillage equipment.

$201 million over six years will go into research into storing carbon and reducing pollution in the land sectors. These funds will be targeted emerging technologies and innovative and sustainable land management practices.

Novel approaches, including biochar, biofuels and new crop and grazing species are specifically targeted. Grants of up to $99 million will be provided for landholders to test and implement these activities.

Indigenous land owners and communities also receive targeted support ($22 million over five years) to benefit from the Carbon Farming Initiative.

Regional catchment and natural resource management bodies will receive a boost, with $44 million over five years to develop scenarios and prepare for climate change impacts and develop plans to guide carbon farming investment in the landscape.

A new governance body, the Land Sector Carbon and Biodiversity Advisory Board will be established to review and oversee land sector initiatives, provide advice to Government on the effectiveness of assistance and coordinate research activities to avoid duplication.

International linking means that after the flexible price period commences on 1 July 2015. Australian businesses will be able to buy international permits from credible international carbon markets or emissions trading schemes in other countries. Although, until 2020, businesses will have to meet at least half of their annual obligations each year by buying Australian carbon permits or credits.

This linkage will provide for potential investment in land-based offsets overseas, including reforestation or avoided deforestation, forest degradation and enhancement of forest carbon stocks through sustainable management under the UN REDD+ initiatives. Safeguards will be in place to ensure international permits are credible and do not undermine the environmental integrity of Australia’s pollution reduction efforts.

Farmers and other generating land-based credits in Australia will also be able to sell their Carbon Farming Initiative credits to international markets.

Overall, linking investment in the land with emissions trading is a major outcome. The plan represents a significant boost to land and natural resource management, and to research and skill development. Funds for land management have been scarce since the Natural Heritage Trust was wound up some years ago. Many felt that an opportunity was missed to provide a flow of funds from the GST to land and water management (perhaps by applying the GST to food). If future governments can maintain this connection it will be a valuable long-term commitment.

The plan represents a significant opportunity for rural Australia to benefit from new types of industries and income streams.

The challenge will be to ensure that the large investment in the Biodiversity Fund has genuine carbon outcomes and that market arrangements are sufficiently flexible.

The government must encourage wide involvement and new types of management systems that effectively integrate the production of food, fibre and fuel with the conservation of biodiversity, water quality and other environmental outcomes.